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Canadian Dollar Volatility Remains Persistent

CAD - Canadian Dollar

The Canadian dollar made slight gains against the greenback yesterday after GDP data showed the domestic economy grew slightly in January. Crude oil prices rose 2.4% over the $20.50 a barrel after President Trump, and Russian President Vladimir Putin agreed to talks on stabilizing oil markets. The loonie had its most significant monthly decline in more than five years this past March as COVID-19 recoils market sentiments. March saw the Bank of Canada its key interest rate three times in a bid to ease liquidity strains as business close and default concerns escalate. The Canadian dollar today has been mixed as month-end, and quarter-end flows make their way through the market and participants position themselves for the 2nd quarter and the uncertainties in the COVID-19 pandemic. The Canadian dollar was trading 0.6% higher at 1.4163 to the greenback with immediate resistance at 1.4170, a break to the upside could trigger a rise toward 1.4260. To the downside, direct support is seen at 1.4143; a break low would push the pair to the 1.4000(Psychological level). The average true range for the USDCAD pair on a daily chart is 275 basis points, large swings in pricing are still being seen and are expected to continue.

Key Movers

The U.S. Dollar crept higher through trade on Tuesday, advancing against most major counterparts as investors adjusted end of the month and quarter positions. The dollar closed the first three months of the year as the best performer among majors up some 2.8%. At the same time, oil and commodity led currencies were the biggest losers with the Norwegian Kroner leading pack, having lost almost a 5th of its value, a move directly in correlation with the tumbling oil price. USD upside through Tuesday was capped, however, as the Fed announced further measure to ease funding pressures. A new program, dubbed the FIMA Repo Facility, has been engineered to improved dollar funding for other central banks. The new platform allows central banks to swap treasuries for overnight USD loans in a bid to ease liquidity strains further and free up capital to drive growth and enhance stability across the global economy. With cash becoming more readily available, the dollar will likely struggle to extend its recent upturn through the short term as markets adjust positions and risk sentiment improves.

Expected Ranges

USD/CAD: 1.4065 - 1.4272 ▲

EUR/CAD: 1.5441 - 1.5617 ▼

GBP/CAD: 1.7444 - 1.7688 ▲

AUD/CAD: 0.8570 - 0.8769 ▲

NZD/CAD: 0.8346 - 0.8474 ▲

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